Japan May Take Indonesia to WTO Over Curbs on Metal Exports

June 12 (Bloomberg) -- Japan, the world’s second-largest
nickel user, called on Indonesia to remove restrictions on
mineral-ore exports, saying it may complain to the World Trade
Organization should compromise talks fail.

“The country’s unilateral measures aren’t appropriate,”
Takayuki Ueda, director-general of the manufacturing industries
bureau of Japan’s Trade Ministry, said yesterday in an interview
in Tokyo. Japan, which would prefer to negotiate a solution, may
file an objection with the WTO should Indonesia proceed with a
complete ban on exports as planned in 2014, he said.

Indonesia said May 3 it would rein in exports of 14
minerals including nickel, copper, gold and iron ore from May 6.
The curbs on those shipments, combined with a 20 percent tax on
the remainder, are aimed at raising their value and boosting
local smelting, potentially increasing costs for smelters in
Japan, the third-largest economy. The resource-poor nation also
suffered when China’s restrictions on exports of rare earths
sent prices soaring, and complained to the WTO this year.

“There are no other countries that would immediately
replace Indonesia,” said Toshio Nakamura, the general manager
of stainless raw materials at Mitsui & Co., Japan’s biggest
trader of nickel. “We will consider how we will secure the raw
material” under the new regulations for the mining industry.

Nickel Prices

Prices of nickel, which is used to strengthen stainless
steel in products from kitchen sinks to aircraft fuel tanks, may
rise about 18 percent to an average $20,000 a metric ton in the
fourth quarter, according to the median of 16 analyst estimates
compiled by Bloomberg. The price has fallen 9.1 percent this
year, the worst performance of the six major metals traded on
the London Metal Exchange.

“It’s not an export ban,” Thamrin Sihite, director-general of minerals and coal at Indonesia’s Energy and Mineral
Resources Ministry, told reporters in Jakarta today. “Ore
exports are still allowed but with requirements,” he said,
adding that the country needs to ensure domestic demand is met,
while managing the environment and regulating mining permits.

Indonesia is the world’s largest producer of nickel ore.
Exports of the raw material from the Southeast Asian country may
drop as much as 20 percent next half, Sukristiyawan, senior
marketing manager at PT Aneka Tambang, the nation’s second-biggest producer, said in an interview last month.

The Trade Ministry’s Ueda is due to meet Rizal Affandi
Lukman, deputy to Indonesia’s coordinating minister for economic
affairs for international trade and economic cooperation, in the
“not-so-distant” future, after the two countries agreed to
hold talks regularly, he said.

“Fighting against Indonesia is not Japan’s objective --
Japan has a long-term relationship with Indonesia and business
ties are also close,” Ueda said. “We’d like to seek solutions
through dialogue.”

Japan Imports

Japan imported 3.65 million tons of nickel ore in 2011,
according to Finance Ministry data. Indonesia supplied 1.95
million tons, or 53 percent, followed by New Caledonia with 27
percent and the Philippines with 19 percent, the data show.

Mitsubishi Corp., Japan’s biggest trading company, and
Pacific Metals Co., a ferronickel producer, have joined France’s
Eramet SA in a project to tap Indonesia’s Weda Bay nickel
reserves. On Feb. 16, Eramet Chief Executive Officer Patrick
Buffet said a development decision should be made in the first
half of 2013.